DISCUSSION BOARD FORUMS INSTRUCTIONS
In the first module/week, submit a thread of 300–400 words directly addressing the forum prompt. In your threads, synthesize course material and
demonstrate critical thinking, graduate-level writing skills, and mature reflection. Cite the textbooks and scholarly articles from professional
accounting and business journals. Use at least 3 journal articles for the Forum. Adhere to current APA format in all posts. Note that
management techniques must not be capitalized.
Select a well-known company with which you have some familiarity (specify the type of industry). Then, select 1 of the contemporary management
techniques listed in Chapter 1 of the Blocher et al. text. Why and how do you feel that the contemporary management technique selected would be a
positive force in helping the company achieve its critical success factors? Do not discuss a technique you already know the company is using.
The first 6 methods focus directly on strategy implementation:
1.
2.
3.
4.
5.
6.
The balanced scorecard and strategy map,
Value chain,
Activity-based costing and management,
Business analytics,
Target costing,
Life-cycle costing.
The next 7 methods help to achieve strategy implementation through a focus on process improvement:
1.
2.
3.
4.
5.
6.
7.
Benchmarking,
Business process improvement,
Total quality management,
Lean accounting,
The theory of constraints,
Sustainability,
Enterprise risk management.
Contemporary Management Techniques: The Management
Accountant’s Response to the Contemporary Business
Environment
LO 1-3
Explain the contemporary management techniques and how they are used in cost management to respond to the contemporary business
environment.
Management accountants, guided by a strategic focus, have responded to the six changes in the contemporary business environment
with 13 methods that are useful in implementing strategy in these dynamic times. The first 6 methods focus directly on strategy
implementation: the balanced scorecard and strategy map, value chain, activity-based costing and management, business analytics,
target costing, and life-cycle costing. The next 7 methods help to achieve strategy implementation through a focus on process
improvement: benchmarking, business process improvement, total quality management, lean accounting, the theory of constraints,
sustainability, and enterprise risk management. Each of these methods is covered in one or more of the chapters of the text.
The Balanced Scorecard (BSC) and Strategy Map
Strategic information using critical success factors provides a road map for the firm to use to chart its competitive course and serves as a
benchmark for competitive success. Financial measures such as profitability reflect only a partial, and frequently only a short-term,
measure of the firm’s progress. Without strategic information, the firm is likely to stray from its competitive course and to make
strategically wrong product decisions—for example, choosing the wrong products or the wrong marketing and distribution methods.
To emphasize the importance of using strategic information, both financial and nonfinancial, accounting reports of a firm’s performance
are now often based on critical success factors in four different perspectives. One perspective is financial; the other three are
nonfinancial:
1. Financial performance. Measures of profitability and market value, among others, as indicators of how well the firm satisfies its
owners and shareholders.
2. Customer satisfaction. Measures of quality, service, and low cost, among others, as indicators of how well the firm satisfies its
customers.
3. Internal processes. Measures of the efficiency and effectiveness with which the firm produces the product or service.
4. Learning and growth. Measures of the firm’s ability to develop and utilize human resources to meet its strategic goals now and into
the future.
An accounting report based on the four perspectives is called a balanced scorecard (BSC). The concept of balance captures the intent of
broad coverage, financial and nonfinancial, of all factors that contribute to the firm’s success in achieving its strategic goals. The
balanced scorecard provides a basis for a more complete analysis than is possible with financial data alone. The use of the balanced
scorecard is thus a critical ingredient of the overall approach that firms take to become and remain competitive. An example of a
balanced scorecard is shown in Exhibit 1.4.
The strategy map is a diagram that links the various perspectives in a balanced scorecard. For many companies, high achievement in
the learning and growth perspective contributes directly to higher achievement in the internal process perspective, which in turn causes
greater achievement in the customer satisfaction perspective, which then produces the desired financial performance. The strategy map
is therefore a useful means in understanding how improvement in certain critical success factors contributes to other goals and to the
ultimate financial results. We cover the balanced scorecard and strategy map throughout the text, particularly in Chapters 2, 12, 18,
and 20.
Page 13
The Value Chain
The value chain is an analysis tool organizations use to identify the specific steps required to provide a competitive product or service to
the customer. In particular, an analysis of the firm’s value chain helps management discover which steps or activities are not
competitive, where costs can be reduced, or which activity should be outsourced. Also, management can use the analysis to find ways to
increase value for the customer at one or more steps of the value chain. For example, companies such as General Electric, IBM, U-Haul,
and Harley-Davidson have found greater overall profits by moving downstream in the value chain to place a greater emphasis on highvalue services and less emphasis on lower-margin manufactured products. A key idea of value-chain analysis is that the firm should
carefully study each step in its operations to determine how each step contributes to the firm’s profits and competitiveness. The value
chain is covered in Chapters 2, 13, and 17.
Financial Measures of Success Nonfinancial Measures of Success
Sales growth
Customer Satisfaction
Earnings growth
Market share and growth in market share
Dividend growth
Customer service (e.g., based on number of complaints)
Bond and credit ratings
On-time delivery
Cash flow
Customer satisfaction (customer survey)
Increase in stock price
Brand recognition (growth in market share)
Internal Processes
Product quality
Manufacturing productivity
Cycle time (the time from receipt of a customer’s order to delivery)
Product yield and reduction in waste
Learning and Growth
Competence of managers (education attained)
Morale and firm-wide culture (employee survey)
Education and training (training hours)
Innovation (number of new products)
EXHIBIT 1.4
THE BALANCED SCORECARD: FINANCIAL AND NONFINANCIAL MEASURES OF SUCCESS
Activity-Based Costing and Management
Many firms have found that they can improve planning, product costing, operational control, and management control by using activity
analysis to develop a detailed description of the specific activities performed in the firm’s operations. The activity analysis provides the
basis for activity-based costing and activity-based management. Activity-based costing (ABC) is used to improve the accuracy of cost
analysis by improving the tracing of costs to products or to individual customers. Activity-based management (ABM) uses activity
analysis and activity-based costing to help managers improve the value of products and services and increase the organization’s
competitiveness. ABC and ABM are key strategic tools for many firms, especially those with complex operations or diverse products and
services. ABC and ABM are explained in Chapter 5 and then applied in several of the chapters that follow.
Business Analytics
Business analytics (BA) (also called predictive analytics) is an approach to strategy implementation in which the management
accountant uses data to understand and analyze business performance. Business analytics often uses statistical methods such as
regression or correlation analysis to predict consumer behavior, measure customer satisfaction, or develop models for setting prices,
among other uses. BA is best suited for companies that have a distinctive capability that can be derived from measurable critical success
factors. BA is similar to the BSC because it focuses on critical success factors; the difference is that BA uses analytical tools to develop
predictive models of core business processes. A 2016 survey by the public accounting firm EY found that 57% of finance leaders saw
business analytics as critical for the finance function (http://www.ey.com/ul/en/accountinglink/publications-libraryoverview). BA is covered in Chapter 8.
Page 14
Target Costing
Target costing is a method that has resulted directly from the intensely competitive markets in many industries. Target
costing determines the desired cost for a product on the basis of a given competitive price, such that the product will earn a desired
profit. Cost is thus determined by price. The firm using target costing must often adopt strict cost reduction measures or redesign the
product or manufacturing process to meet the market price and remain profitable.
Target costing forces the firm to become more competitive, and, like benchmarking, it is a common strategic form of analysis in
intensely competitive industries where even small price differences attract consumers to the lower-priced product. The camera
manufacturing industry is a good example of an industry where target costing is used. Camera manufacturers such as Canon know the
market price for each line of camera they manufacture, so they redesign the product (add/delete features, use less expensive parts and
materials) and redesign the production process to get the manufacturing cost down to the predetermined target cost. The automobile
industry also uses target costing. Target costing is covered in Chapter 13.
Life-Cycle Costing
Life-cycle costing is a method used to identify and monitor the costs of a product throughout its life cycle. The life cycle consists of all
steps from product design and purchase of materials to delivery and service of the finished product. The steps typically include (1)
research and development; (2) product design, including prototyping, target costing, and testing; (3) manufacturing, inspecting,
packaging, and warehousing; (4) marketing, promotion, and distribution; and (5) sales and service. Cost management has traditionally
focused only on costs incurred at the third step, manufacturing. Thinking strategically, management accountants now manage the
product’s full life cycle of costs, including upstream (research and development, design) and downstream (marketing, sales and service)
costs as well as manufacturing costs. This expanded focus means careful attention to product design, since design decisions lock in most
subsequent life-cycle costs. See Chapter 13 for coverage of life-cycle costing.
Benchmarking
Benchmarking is a process by which a firm identifies its critical success factors, studies the best practices of other firms (or other
business units within a firm) for achieving these critical success factors, and then implements improvements in the firm’s processes to
match or beat the performance of those competitors. Benchmarking was first implemented by Xerox Corporation in the late
1970s. Today, many firms use benchmarking. Some firms are recognized as leaders, and therefore benchmarks, in selected areas—for
example, Nordstrom in retailing, Ritz-Carlton in service, the Boeing Company in manufacturing, and Apple in innovation, among
others.
Benchmarking efforts are facilitated today by cooperative networks of noncompeting firms that exchange benchmarking information.
For example, the International Benchmarking Clearinghouse (www.apqc.org) and the International Organization for Standardization
(ISO) (www.iso.org) assist firms in strategic benchmarking.
Business Process Improvement
Whether you think you can or whether you think you can’t—you’re right.
Henry Ford
Henry Ford realized that the right attitude is important to success. That belief is what continuous improvement is all about. Business
process improvement (BPI) is a management method by which managers and workers commit to a program of continuous
improvement in quality and other critical success factors. Continuous improvement is very often associated with benchmarking and
total quality management as firms seek to identify other firms as models to learn how to improve their critical success factors. While
BPI is an incremental method, business process reengineering (BPR) is more radical. BPR is a method for creating competitive
advantage in which a firm reorganizes its operating and management functions, often with the result that positions are modified,
combined, or eliminated.
Page 15
Total Quality Management
Total quality management (TQM) is a method by which management develops policies and practices to ensure that the firm’s products
and services exceed customers’ expectations. This approach includes increased product functionality, reliability, durability, and
serviceability. Cost management is used to analyze the cost consequences of different design choices and to measure and report the
many aspects of quality, including, for example, production breakdowns and production defects, wasted labor or materials, the number
of service calls, and the nature of complaints, warranty costs, and product recalls.
Lean Accounting
Firms that have adopted lean manufacturing, which is one of the six key aspects of the contemporary business environment, will also
typically use lean accounting. Lean accounting uses value streams to measure the financial benefits of a firm’s progress in
implementing lean manufacturing. Lean accounting places the firm’s products and services into value streams, each of which is a group
of related products or services. For example, a company manufacturing consumer electronics might have two groups of products (and
two value streams)—digital cameras and video cameras—with several models in each group. Accounting for value streams can help the
firm to better understand the impact on profitability of its lean manufacturing improvements. TQM and lean accounting are covered
in Chapter 17.
The Theory of Constraints
The theory of constraints (TOC) is a methodology that improves profitability and cycle time by identifying the bottleneck in the
operation and determining the most profitable product mix given the bottleneck. TOC helps to eliminate bottlenecks—places where
partially completed products tend to accumulate as they wait to be processed in the production process. In the competitive global
marketplace common to most industries, the ability to be faster than competitors is often a critical success factor. Many managers argue
that the focus on speed in the TOC approach is crucial. They consider speed in product development, product delivery, and
manufacturing to be paramount as global competitors find ever-higher customer expectations for rapid product development and
prompt delivery. TOC is covered in Chapter 13.
Sustainability
Sustainability means the balancing of the organization’s short- and long-term goals in all three dimensions of performance—social,
environmental, and financial. We view it in the broad sense to include identifying and implementing ways to reduce cost and increase
revenue as well as to maintain compliance with social and environmental regulations and expectations. This can be accomplished
through technological innovation and new product development as well as commonsense measures to improve the social and
environmental impacts of the company’s operations. Ford Motor Company saves money through improvements in its stormwater
draining system at its River Rouge, Michigan, plant; other leaders in sustainability include Toyota and Honda, McDonald’s, and
Walmart, among many others. The Dow Jones Sustainability Indices (www.sustainability-indices.com/) identify and rank
companies according to their sustainability performance. Sustainability is a key topic and is covered in each chapter; look for the
sustainability icon next to problems involving this management technique.
Enterprise Risk Management
Enterprise risk management (ERM) is a framework and process that organizations use to manage the risks that could negatively or
positively affect the company’s competitiveness and success. Risk is considered broadly to include (1) hazards such as fire or flood; (2)
financial risks due to foreign currency fluctuations, commodity price fluctuations, and changes in interest rates; (3) operating risk
related to customers, products, or employees; and (4) strategic risk related to top management decisions about the firm’s strategy and
implementation thereof. For financial service firms particularly, ERM has become a much more important topic since the passage of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (2010), which requires new regulations for these firms. To indicate how
widely used ERM has become, a survey of more than 1,000 risk management professionals by the Risk Management Society (RIMS)
found that 63% of the organizations surveyed
(www.rims.org/aboutRIMS/Newsroom/News/Pages/2013RIMSERMSurveyNowAvailable.aspx) either had an ERM Page
16 program in place or were currently implementing one. A recent survey of 100 senior finance executives by the American Productivity
and Quality Center (APQC) indicates that only one in five of the executives were satisfied with their company’s corporate risk
management systems (September–October 2013 issue of Supply Chain Management Review). So while there has been progress in risk
management, there is apparently continuing room for improvement (www.apqc.org). The text explains the role of ERM in Chapters
10, 11, and 12.
Standardized Rubrics Template
BUSI 601
For Discussion Board Postings Original –Forum 1
80 points
Criteria
Levels of Achievement
Advanced
Proficient
Developing
Content 70%
Management Technique
Evaluation
Appropriateness of
Technique
Synthesis
Positive Force of
Technique
4 points
Thread clearly specifies the
company, the industry, and the
management technique to be
analyzed
12 to 11 points
Technique appropriate for
company, description
developed and includes
adequate details detailed
correlation between technique
and company
12 to 11 points
Thread describes how the
technique selected will be a
positive force for the company
and provides appropriate
examples. One or two examples
provided
3 points
Thread clearly specifies the
company and industry but not
the technique
2 to 1 points
Company identified but not the
industry
10 points
Technique described but not in a
detailed manner. Few details and
no correlation
9 to 1 points
Technique identified but no detail
as how it applies to company
10 points
Description of impact of
technique to company but
incorrect examples
9 to 1 points
Description of impact of technique
to company but no examples
Not present
0 points
Not present
0 points
Not present
0 points
Not present
Originality
Overall Content
28 to 26 points
Thread conforms to the
instructions.
Content is well developed.
Included originality of thought.
Paragraph structure and flow is
excellent.
Analysis of the technique
selected is provided.
Questions are answered
thoroughly and supported using
substantial research data
25 to 24
Thread conforms to the
instructions.
23 to 1
Content is organized based mainly
on text little collaborating research
data
0 points
Not present
Content is developed but
lacks originality of thought. Too
many direct quotations.
Paragraph structure and flow
is excellent.
Analysis of the technique
selected is provided.
Minimal research sources used
Structure 30%
Grammar/Spelling and
APA formatting
Advanced
13 to 12 points
No grammar or spelling errors
Proficient
11 points
Only one minor error and 1 APA
error
Text and Journal
Support
/
11 points
Thread contains appropriate
word count and content
supported with text and relevant
scholarly research data
10 to 9 points
Thread contains appropriate
word count and content not
supported with text and relevant
scholarly research data
Developing
10 to 1 points
Two grammar errors and at least 2
APA errors
8 to 1 points
Thread had irrelevant scholarly
sources and unsubstantiated
opinion statements
Not present
0 points
Not present
0 points
Not present
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